Beware: I am a newbie so what I might do here could also be a bad mistake but here are my thoughts...
If I were in your shoes then I'd be thinking about some variables. How much will it cost to rehab and after doing so, where will my rent max out at? Will the area allow for me to really cash flow nicely after doing a cash out refi, allowing for my rehab work to really force appreciation to get your initial investment dollars back so you can do it again? Kind of like the BRRRR strategy if I understand that strategy correctly. (still very new here) Or after rehabbing will the value increase enough to just sell, making it a flip?
For me I would revert back to my business strategy/game plan to accomplish my overall goal and that, for me personally, would mean cash flowing 125+ dollars/unit after ALL expenses per month. If I can do that then I am comfortable with the deal because I can either rent for a decent income or I can sell it for a profit because of its new value.. I also am in the buy and hold strategy so selling does not interest me after doing some minor rehabbing/updating.. That is done to max out rent if the costs make sense to do so for my area.. Being able to sell could be an exit strategy though if rent rates are too low.. Personally, the rent on a property is my line of defense... So if renting breaks even or doesn't cash flow after ALL expenses after a rehab then I am nervous and might shy away because if I can't sell and can't rent, then sh*t I would feel stuck in mud....
As far as obtaining financing, I have no clue. I am way to knew and haven't been down that road. I am currently doing investor financing with a smaller bank in WI (25% down) on a 2 unit duplex that hits my number's criteria. It really sucks that I have to use 25% of my own money but this is my first deal and I don't want to live in it so I can cash flow better... With your situation, I would definitely want to make this deal 1 loan, using as little as my own money as possible so that when I go to refi. the return pays off nicely because I didn't use a lot of my own money to begin with. Debt free is so awesome but I feel like in this industry with my plan to grow rapidly and efficiently, it will require taking on some decent size debt.
My first deal will be $89,500 with a $67,125 mortgage w/ a current home value of 99k, putting 25% down on agreed offer... Decent equity after some simple updates, but not a whole lot of money left for me to do another deal because 25% down hit me hard... But it is cash flowing after ALL expenses, 300/month or 150 per unit AND I am going to be learning the business off this property since it is my first one. So its a paid education as well lol.... Pros and Cons of my situation so hope it helps.. Take care!
Good luck!
Cody
